PPA oks 16% tariff hike at MICT, South Harbor

June 21, 2024

  • The Philippine Ports Authority approved the 16% increase in cargo-handling tariff at Manila International Container Terminal and Manila South Harbor
  • The hike will be enforced in two tranches: the first tranche of 10% to be implemented “not earlier than August 5, 2024”, and the second (6%) will take effect six months after effectivity of the first tranche
  • The PPA Board during its regular meeting on May 28, 2024 approved the petition for cargo-handling rate increase at the two Manila international terminals
  • PPA Commercial Services Department manager Mark John Palomar confirmed the hike to the Philippine Exporters Confederation in a June 7 letter

The Philippine Ports Authority (PPA) has approved the 16% increase in cargo-handling tariff at Manila International Container Terminal (MICT) and Manila South Harbor, according to the Philippine Exporters Confederation, Inc. (PHILEXPORT).

PHILEXPORT said it received a letter dated June 7 from PPA Commercial Services Department manager Mark John Palomar which noted that the PPA Board during a meeting on May 28, 2024 had approved the petition for cargo-handling rate increase at the two international terminals.

The letter was in response to PHILEXPORT president Sergio Ortiz-Luis Jr.’s letter to PPA dated May 15 petitioning the port authority to defer the increase until the export industry has recovered from unstable market conditions.

PPA said the tariff hike will be enforced in two tranches, with the first tranche of 10% to be implemented “not earlier than August 5, 2024.”

The second tranche, an additional 6% increase, will take effect six months after effectivity of the first tranche.

Port operator Asian Terminals Inc. (ATI) earlier proposed a 16.55% upward adjustment in the cargo-handling tariff and other related and miscellaneous charges at Manila South Harbor while International Container Terminal Services, Inc. (ICTSI) petitioned for a 17% increase in cargo-handling tariff, excluding transshipment, for MICT. A virtual public hearing on their petitions was conducted by PPA on April 19.

Under PPA rules, the cargo-handling/terminal operator may apply for a cargo-handling tariff adjustment if the consumer price index (CPI) has increased by at least 5% within a three-year period.

Both ATI and ICTSI during the public hearing said CPI had increased by at least 5% since the effectivity of the last tariff increase.

The last cargo-handling tariff rate adjustment for the two ports was in 2021, when PPA granted a 10% rate increase implemented in two tranches—2% in 2021 and 8% in 2022.

PHILEXPORT and the Export Development Council have long been opposing any cargo-handling rate increases at Philippine ports.

PHILEXPORT said they have pointed out that PPA has a share in cargo-handling revenues generated by cargo-handling contractors and port-related service operators. Thus, in PHILEXPORT’s view, the approval of any cargo-handling tariff hike constitutes a “conflict of interest” as the PPA, being the regulator, also benefits from its own regulation, giving the agency the incentive to increase the rate to improve its financial health.

Aside from PHILEXPORT and EDC, other stakeholders and business groups have for years been requesting and recommending the separation of PPA’s functions, citing conflict of interest and saying exercising both functions “unnecessarily increases logistics costs.” Bills have also been filed in Congress seeking to separate PPA’s commercial and regulatory functions.

PHILEXPORT said the looming cargo-handling tariff increase comes on the heels of the expansion in storage charges for foreign containerized cargoes at all PPA ports in January 2024.

PPA Memorandum Circular No. 021-2023 provides a 32% increase in storage charges for foreign containerized cargoes and impose a surcharge to the storage fee of reefer containers.

Trade groups including PHILEXPORT had also opposed the increase, noting it was too high and would hurt the economy and the stakeholders already facing inflation and a weak global economy.

Source: https://www.portcalls.com/ppa-oks-16-tariff-hike-at-mict-south-harbor/